Weekend discussion: Has the Habanos crown slipped? Can it be reclaimed?

[El Presidente]

Less than a decade ago, outside of the US, there was Habanos and daylight. Yes, Davidoff flew the flag for New World cigars, but it was largely ten lengths behind Habanos in a very short field.

Fast forward ten years and the international (non-US) premium cigar landscape has changed dramatically.

A decade ago Habanos repeatedly stated that it held around 70% of the premium handmade cigar market by volume. Today I wonder what that figure would be across Europe, the Middle East and Asia. Fifty percent? Forty? Less? Whatever the number, it seems difficult to argue that market share by volume isn't declining.

What's fascinating is what has happened since 2022.

2022: US$545 million
2023: US$721 million
2024: US$827 million

Despite production constraints and lower volumes, revenue growth has come overwhelmingly from pricing and mix rather than additional cigars.

Perhaps Habanos no longer commands 70% of the market by volume, but it may still command 70% by value. 

Or at least it did... until 2026. 

2026 has been nothing short of a train wreck for Cuba. Chronic power outages, fuel shortages and a rapidly deteriorating economy have disrupted every stage of the tobacco chain, from the fields to fermentation and the factories. Add a collapse in tourism and foreign currency, and Habanos finds itself trying to run a global luxury business from an island struggling simply to keep the lights on.

The pain hasn't been confined to Cuba. Around the world, distributors and retailers are trying to run viable businesses with shrinking allocations while fixed costs such as rent, wages, freight, warehousing and compliance continue to climb. Layer on top of that an increasingly complex financial landscape, particularly as the Trump administration has tightened sanctions on foreign companies dealing with Cuban government entities, and banks, insurers and payment providers have become even more cautious.

The result is that many of the traditional Habanos distributors and retailers, those who cautiously dipped a toe into New World cigars five years ago, are now banging on the door of just about every premium cigar manufacturer capable of filling their shelves. Empty humidors don't pay the bills. Loyalty to Habanos remains, but survival demands diversification.

Then came the Chen Zhi affair.

The allegations, investigations and reported enforcement actions surrounding Chen Zhi cast an unwelcome spotlight on businesses connected, however indirectly, with the Habanos distribution network. Compliance departments, banks and financial institutions, already wary because of sanctions and AML obligations, suddenly had another reason to scrutinise ownership structures and payment flows. Whether justified or not, doing business became more complicated, more expensive and subject to another level of due diligence.

Yet Habanos still possesses one thing nobody else has. The finest cigar tobacco in the world. The problem is not desirability. The problem is supply.

Premium New World manufacturers with quality product and reliable production are only too happy to fill the vacuum. Nature abhors a vacuum. Business does too.

Which brings me to my weekend question.

Has Habanos lost, or is it in the process of losing, its psychological hold over the international premium cigar market outside the United States?

For decades, if you wanted the best, you bought Habano. That mindset survived shortages, embargoes, quality fluctuations and extraordinary price rises. Is it finally beginning to change? Are Habanos' glory days behind it, or is this simply another chapter in a long history of peaks and troughs?

More importantly, once distributors, retailers and consumers establish new habits and new loyalties, can Habanos ever reclaim the ground it has lost?

Interested in your thoughts. 

[Li Bai]

38 minutes ago, El Presidente said:

Has Habanos lost, or is it in the process of losing, its psychological hold over the international premium cigar market outside the United States?

I don't think it is, I think cigar smokers are fed up with pricing and availability, sure, but they'd go back to Cubans as soon as possible, that's it. If more NC manufacturers were to take the high road like Fab5 does, there would be a chance to see this change in the next few years, just my humble opinion of course.

[Duder]

I’ve been in denial for a while now but am slowly coming to the realization Habanos has lost its grip. In many respects the glory days are behind them and I don’t think it will be long before they are almost universally considered overpriced, over-hyped and not worth the trouble. Cuban tobacco is still at the top of the chart but the divide is narrow now. Habanos is still making phenomenal cigars as we speak. For myself, there is no substitute. There never will be. For newer smokers they are not worth the hassle. The king is not dead yet but he is on life support. It’s breaking my heart.  

[Boss Hog]

1 hour ago, Li Bai said:

I don't think it is, I think cigar smokers are fed up with pricing and availability, sure, but they'd go back to Cubans as soon as possible, that's it.

 

50 minutes ago, Duder said:

Habanos is still making phenomenal cigars as we speak. For myself, there is no substitute. There never will be.

Could not have said it better myself, gentlemen. 👍

[DrinkSmokeGolf]

I think it’s the beginning of the end for Habanos. Have a listen to today’s “The Daily” for a glimpse at Cuban life right now. Cuba Under Seige

It’s not going to get better anytime soon.

Thank God for Honduran tobacco!

 

 

[loose_axle]

For years I never bought anything but Cubans even as a know nothing luddite. The only things NC that interested me were Opus, Andalusian Bull and Davidoff. 

If I had the money I'd still buy Cubans only I reckon but having dipped my toe into the NC world and found some absolute, and in some cases, Cuban beating gems, I'm grateful for the fall of Habanos. 

I feel like a schizo who can't find the right physician or medication these days as far as the cigar world goes. 

 

[El Presidente]

9 hours ago, Li Bai said:

I don't think it is, I think cigar smokers are fed up with pricing and availability, sure, but they'd go back to Cubans as soon as possible

I think you nailed the two major issues. Pricing and Availability. 

On pricing they have nailed their position to the mast. Despite lower volumes, they are going to make as much money as possible and that can only mean higher ROI releases and higher prices. That is not a criticism. However they have priced out a large % of their previous market. That was a savage and deliberate retreat to the high ground that it could defend. 

On Availability they have little control which must be scaring the bejesus out of them. They don't know where they will be in 6 months time. They don't even know if they will be in the game at all. NC's are rolling across the flat grounds/previous fortifications of Europe/Asia/Middle East and Habanos right now have no ammunition and few answers stop the momentum. Protect the high ground. The Hermes of cigars may be the last bastion. 

 

[TheCigarSoldier]

I think everything you've said is spot on. They have the best raw material in the world. The combination of their climate and the make up of their soil allows for remarkable medium bodied cigars. I've always found the complexity of a cuban cigar to be extraordinary because of their puro nature as opposed to new world cigars having the luxury to blend tobacco from a whole variety of countries and regions. 

That said, they will absolutely lose their market. It is not if, but when. By their deliberate move to price out a large % of their market, new generations of cigar smokers will never get into the hobby via Cuban cigars. Sure, there will be luxury markets and high earners who will pay whatever it takes (assuming there's a supply left to be purchased), but there are far more cigar smokers who value a good deal than those who don't in my opinion. Eventually it'll come down to the principle of it all.

Furthermore, Non-Cuban quality and blending is getting better and better every year. The cigars coming out today are some of the best runs I have ever seen from new world brands, and there are dozens of options to choose from (fab 5 included). They're not one-for-one substitutes, but there are enough similarities to fill that void. I think as more and more retailers acquire these New Wworld cigars, the consumer palate will continue to evolve and may begin to prefer the slightly stronger nature of their newer offerings compared to Cuban cigars.

I don't think it's impossible to reclaim the ground it has and will continue to lose, but it will be a decade long campaign and an uphill fight. I still don't think we've seen the bottom for Cuba.

To be fair, I grew up on Cuban cigars and still love them. Given everything going on, I smoke what I do have sparingly and would still to this day place them in the ring as the pound for pound as the best in the world. The problem is I just can't count on them to show up to the fight. 

[zacca]

Habanos as a commercial enterprise is certainly on rough footing given all of the issues you outlined. In my opinion, though, those things don’t determine the strength of the Habanos brand in consumers’ minds.

In other words:

• Business: Habanos S.A. may be losing operational strength, market share, and influence over the trade. It may become a smaller commercial player simply because it can’t supply the market.

• Brand: “Habanos” (or perhaps more accurately, “Cuban cigars”) still occupies a unique place in consumers’ psychology. It remains the aspirational benchmark, the luxury product with the mystique. That emotional positioning isn’t easily displaced by production problems, ownership scandals, or supply chain issues because most consumers either don’t know about those issues or don’t factor them into their purchasing decisions.

To me, this is a case where brand equity is so strong that it’s largely decoupled from business performance.

I’d compare it to Ferrari. It could produce half as many cars, lose dealer network strength, or even struggle financially without losing its status as Ferrari. If anything, scarcity could reinforce the perception of exclusivity.

So while Habanos may lose market share, I’m not convinced it’s losing its psychological hold on consumers.

[chasy]

Kind of crazy that an internationally famous brand like Habanos does $800m in revenue and some unknown, bullsh*t software business does twice that. Reminds you that it really isn’t that big of a business.

I hope one day they get production and pricing under control. It would be great to reliably purchase and not pay through the nose.

Glad Non-Cubans are putting pressure on Habanos. They are worth a premium, but I’m hopeful that premium is closer to 25% and not 200%.

[BrightonCorgi]

If you're into the cycling, I see similarities to the rivalry between Campagnolo and Shimano. Campagnolo being Habanos. 

The luster and lore of the default great isn't so vaulted in the consumers' eyes. The reason how they got there are a little different, but loss of market share and consumer sentiment are similar.

[Duder]

Though I love wine I’m not an oenophile by any means. Still it seems to me there are some parallels here to French wine and the rest of the world, the Cuban economic crisis notwithstanding. Decades ago all I ever heard was, French wines are the gold standard. Now folks rave about wines from all over the world saying they’re close if not equal and sometimes even better. Am I way off here? 

[joeypots]

2 hours ago, Duder said:

Though I love wine I’m not an enophile by any means. Still it seems to me there are some parallels here to French wine and the rest of the world, the Cuban economic crisis notwithstanding. Decades ago all I ever heard was, French wines are the gold standard. Now folks rave about wines from all over the world saying they’re close if not equal and sometimes even better. Am I way off here? 

No. Check out the Judgment of Paris. Held on May 24, 1976, a blind tasting that completely shocked the global wine industry when California wines beat out prestigious French Bordeaux and Burgundy labels in both the red and white categories.

[riderpride]

22 hours ago, Duder said:

Though I love wine I’m not an enophile by any means. Still it seems to me there are some parallels here to French wine and the rest of the world, the Cuban economic crisis notwithstanding. Decades ago all I ever heard was, French wines are the gold standard. Now folks rave about wines from all over the world saying they’re close if not equal and sometimes even better. Am I way off here? 

I think it's essentially this. Preference is subjective and the things we like are based from our experience, and unchallenged beliefs (especially shared ones) are sometimes mistaken for fact. The reduction in Cuban supply and relatively high pricing means most of us will seek out what is available and learn to appreciate it for what it is. We are now forced to confront out biases. Will people still go for Cuban? Yes - I can't find a replacement for Juan Lopez or Punch yet, but the percentage of my purchases from Cuba has dropped forever. 

Cheers!

 

[Çnote]

22 hours ago, Duder said:

Though I love wine I’m not an enophile by any means. Still it seems to me there are some parallels here to French wine and the rest of the world, the Cuban economic crisis notwithstanding. Decades ago all I ever heard was, French wines are the gold standard. Now folks rave about wines from all over the world saying they’re close if not equal and sometimes even better. Am I way off here? 

 

19 hours ago, joeypots said:

No. Check out the Judgment of Paris. Held on May 24, 1976, a blind tasting that completely shocked the global wine industry when California wines beat out prestigious French Bordeaux and Burgundy labels in both the red and white categories.

Yep, all I could think of reading the initial question was Habanos = Bordeaux c1900, no toe-to-toe competition. Most modern wine making principles come back to Bordeaux putting themselves back on the map, like cooled fermentation & massal selection replanting in 1950s, but today anyone with a rocky slope and sun can make great wine with a generation or so of brutally hard work and burning a fortune. You could argue Bordeaux has also priced out the average consumer and failed to recognize the bounty comes from the land and not the brand.

I'd guess it's Habanos v Fuente, if Carlito wants to fight a fight. I only know a couple of stores that don't stock Fuente and it's part of their bit.

[laficion]

Hello everyone,

As "Duder" said exactly, "there is no substitute, there never will be." with ALL the problems Habanos S.A. has and will have, it still stands to be true.

Amicalement,

Guy

[BrightonCorgi]

22 hours ago, Duder said:

Though I love wine I’m not an enophile by any means. Still it seems to me there are some parallels here to French wine and the rest of the world, the Cuban economic crisis notwithstanding. Decades ago all I ever heard was, French wines are the gold standard. Now folks rave about wines from all over the world saying they’re close if not equal and sometimes even better. Am I way off here? 

French wines are still the gold standard without question. There are great wines made on several continents, but "the best" are still French. I don't think there is even a real debate on this.

[El Presidente]

 

[Çnote]

10 hours ago, El Presidente said:

Those are recent numbers, so hard to see the trend. The increases of value in Bordeaux and Burgundy out pace the the gains of Brunello and Barolo. Pinot Grigio & Prosecco, Rioja & Cava export volume gain while French export production shrinks to make a more expensive product to compete against the bottom shelf, which Spain has claimed while still keeping a very top end which competes in price to Bordeaux.

20 hours ago, BrightonCorgi said:

French wines are still the gold standard without question. There are great wines made on several continents, but "the best" are still French. I don't think there is even a real debate on this

Would you disagree with my edits?

CUBAN CIGARS are still the gold standard without question. There are great CIGARS made on several continents, but "the best" are still CUBAN. I don't think there is even a real debate on this.

[ha_banos]

I'm just patiently waiting for some resolution to the Cuba problems. It's just a blip in the big scheme of things. A mighty painful blip for the people. I've not found any alternative to the Cuba tobacco overall. Sure some fillers along the way. We're discovering all sorts of new things. The problem for me will be cost. The pricing won't come down. So from that perspective yes. The Habanos crown has well and truly fallen. Not necessarily to new alternatives. But priced themselves out for me. Farewell.

 

 

[chasy]

Sadly it feels to me like Cuban Cigars were criminally underpriced for a long time. And now they are actually more in line with where they should be. As much as I want PSD4 and CoRo to come down 50% in price, I can’t really see a scenario where that happens.

[Boss Hog]

1 hour ago, chasy said:

Sadly it feels to me like Cuban Cigars were criminally underpriced for a long time. And now they are actually more in line with where they should be.

Bingo. 👍

[Glass Half Full]

I agree w @chasy, @Duder and nearly all of the sentiment expressed above.  

CCs and French wine (all alcohol really) have the same problem as every good vice. There are fewer and fewer people left who actually get it -- and care to take the health risks in return for the flavor fun. (I get that, as I've had to pare back on many things I enjoy, ...but I still enjoy them :)  

Many of those fun things were a good fortune of discovery at the right time (when few paid attention; and the experiences weren't costly)...Sure, there's a big-spending minority for new Cuban cigars -- but (I believe) that's likely a shrinking minority, which gets grayer each year.

Most of the younger "cigar guys" I meet do not have the desire (or time) to put up with the cost and inconsistencies of CCs.  Add sketchy sourcing and a shakier supply, and there you have it:  I believe "the bloom is off the rose."  

CC's of old are still a wonder.  We savor what's left while it lasts. But we must always stay open, stay curious about what's new. Creators never stop, and we learn from them whether we like the "new thing" or not. In the process we learn more about all the things we love. 

It's the same for wine, music, art, whatever. Learning about new things isn't cheating on the old -- and loving the old doesn't require keeping out the new.

The world changes. Embrace it.

[ElLoboLoco]

Fabrica 5 Churchhill is 80% of a Sir Winston at 10% of the cost. Who cares in my world view!

Oh, and I can actually get them.

[ReelMan]

I, too, believe that Cuban cigars, marketed by Habanos, will remain aspirational: Cuban cigars have always been the "gold standard", pulling in new generations based on its past glory and excellent craftsmanship. They will survive. They just won't retain the volume and a fair amount of the cache that they once occupied with the international marketplace. I would posit a 20% world market share in another couple of years. Cigar smokers tastes are changing as a result of the price/availability matrix and, once changed, purchasing patterns will morph to other options for good.

What HAS changed has been the significant evolution of the cigar in the NW cigars. It's not "Cuban or everything else" anymore. What I have seen is the emergence of the "very good in it's own right" cigar production. Varied tastes for a varied market.

Fabrica 5 has been one of the vanguard brands of a new type of manufacturer; one that produces a unique cigar with a similarity to the Cuban ethos, but stands on its own as an "as good as" option. The times, they are 'a changing...